The US dollar index (DXY) is holding steady after the latest US initial jobless claims and manufacturing index data. It rose to $92.52, which was slightly above Wednesday’s low of $92.25.
US initial jobless claims
The US economy is firing on all cylinders as the country reopens. This is evidenced by the relatively strong economic numbers from the country. For example, early this month, the numbers showed that the economy added more than 850,000 jobs in June while the unemployment rate has dropped to 5.9%. And this week, data revealed that the US inflation rose to the highest level in more than 13 years.
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Data published on Thursday showed that the country’s initial jobless claims declined to 360k last week after rising to 386k in the previous week. This decline was in line with estimates. As a result, the US continuing jobless claims numbers declined from more than 3.367 million to 3.241 million, the lowest level since the pandemic started.
Meanwhile, the US dollar index also reacted to the positive manufacturing numbers from New York. According to the New York Fed, the empire state manufacturing index rose from 17.40 in June to 43 in July. This was significantly higher than the median estimate of 18. On the other hand, the closely watched Philadelphia Fed manufacturing index declined from 30.7 to 21.9.
The DXY is also rising even after a dovish Jerome Powell testimony. In his statement, the chair said that the US inflation was rising at a faster rate than the bank was expecting. Nonetheless, it said that it expects to carry on with its plan as highlighted in the past meetings.
Therefore, the performance of the US dollar index is likely because investors are convinced that the Fed will soon turn hawkish. Furthermore, the Reserve Bank of New Zealand (RBNZ) and Bank of Canada (BOC) have already started to taper their purchases.
US dollar index prediction
The US dollar index is in an overall bullish trend as shown in the 4-hour chart above. The index is above the ascending trendline that connects the lowest levels since June. It is also above the 25-day and 50-day moving average while the MACD is above the neutral level. Therefore, the index will likely keep rising as bulls target the upper side of the channel at $92.80
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